Trade in other currencies to relieve pressure on dollar - BoG
The Bank of Ghana (BoG) has appealed to importers who trade from other countries apart from the United States to trade in currencies of the country of importation to free the pressure on the dollar.
The high request for the dollar for trading purposes has been a major challenge for the central bank in adequately meeting the demand of dollars for importers.
Due to this, some observers have also called for the use of other currencies to reduce the pressure on the cedi.
According to the Bank of Ghana, as at March this year the Ghana cedi had cumulatively depreciated by 3.5 percent against the US dollar, significantly recovering from 8.8 percent depreciation recorded by 8th March.
With Ghana being an import-driven economy, some financial watchers have advised that importers can trade in other foreign currencies such as the Chinese Yuan to reduce the high demand for the dollar.
Currently only two banks in Ghana is said to trade in the Chinese Yuan.
Meanwhile, China is a major trade partner of Ghana with trade volume estimated to hit over 3 billion dollars by close of 2017.
An importer, Nana Preprah who spoke to Citi Business News explained that most importers prefer the dollar due to its value in exchange for the Yuan.
“If you compare the value of the dollar to the Yuan, you will will realize that the dollar is easy to handle and easily convertible into lots of Yuan.
Assuming you handle $50,000, its equivalent in Yuan is so much that you may not want to handle it,” he stated.
He pointed out that most of the international currencies use the dollar as a benchmark converter hence, it provide an easy mode to transact business.
“All the market places such as Dubai, Singapore and China all accept the dollar directly so it makes trading very easy,” he said.
Ghana-China Friendship Association
Meanwhile, the Ghana-China Friendship Association, an organization championing trade between the two countries is of the view that Ghana could benefit in increasing trade in the Chinese Yuan due to the economic power of China.
An Executive Member an Communications Manager Henry Mallet told Citi Business News, Ghana must take advantage now to reduce the growing pressure on the cedi.
“There is a great advantage because you have to change your currency for about three to four times when you deal in the dollar. You have to change the cedi into dollar, then you change into Yuan so you lose in changing it into dollar , and you lose in changing it into Yuan because of the charges that go with it, but if you have the Yuan directly you gain,” he said.
He was of the view that importers will not only free the dollar from pressures of demand but it will also cut down the cost of imports.
For the Bank of Ghana, the move lies in the ingenuity of banks in the country.
The bank believes commercial banks can take advantage of the growing economy of China and aggregate Ghanaian businessmen who trade in china and provide them the service.
Head of Banking Supervision at the Bank of Ghana, Mr. Raymond Amanful admits there must be more education on the issue.
He maintained that banks must collaborate with international banks to help transact businesses in other foreign currencies.